Chapter 4 Powerpoint - CHAPTER 4 Analysis of Financial...

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CHAPTER 4 Analysis of Financial Statements
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F i n a n c i a l S t a t e m e n t s F r e e C a s h F l o w T a x e s R a t i o A n a l y s i s E c o n o m i c V a l u e A d d e d F I N 3 4 0 3 - B u s i n e s s F i n a n c e B a s i c S t a t e m e n t s
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Balance Sheet Assets Year 4 Year 5 Cash 29 19 Accounts Receivable 549 711 Inventory 672 873 Current Assets 1,250 1,603 Gross Fixed Assets (PPE) 230 230 Less: Accumulated Depreciation (46) (60) Net Fixed Assets (PPE) 184 170 Total Assets 1,434 1,773
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Balance Sheet Liabilities and Equity Year 4 Year 5 Accounts Payable 210 214 Notes Payable 329 539 Accruals 48 45 Current Liabilities 587 798 Long-term Debt 208 258 Total Liabilities 795 1,056 Common Stock 490 520 Retained Earnings 149 197 Total Equity 639 717 Total Liabilities and Equity 1,434 1,773
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Income Statement Income Statement Year 4 Year 5 Sales (Net Revenues) 2,939 3,841 Cost of Goods Sold (2,279) (2,966) Gross Profit 660 875 Other Expenses (524) (703) Depreciation (14) (14) EBIT 122 158 Interest (38) (64) EBT 84 94 Taxes (40%) (34) (38) Net Income 51 57
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Other Data Most Items on Per Share Basis Year 4 Year 5 Shares Outstanding 11,909,954 12,445,668 Book Value Per Share $53.68 $57.57 Dividends Per Share $0.60 $0.75 Total Dividends (in millions) $7.1 $9.3 To Retained Earnings (in millions) $43.5 $47.2 Price Per Share $58.23 $52.74 Earnings Per Share $4.25 $4.54 P/E Ratio 13.7 11.6 Total MV of Equity $694 $656 Lease Payments (in millions) $27 $48
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Basic Ratios Why are ratios useful? Standardize numbers and facilitate comparisons. Used to highlight weaknesses and strengths.
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Basic Ratios Liquidity ratios Asset management ratios Debt management ratios Profitability ratios Market value ratios
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Liquidity Ratios Current ratio Quick or acid test ratio
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Yr. 3 Yr. 4 Yr. 5 Ind. CR 5 = CA / CL CR 5 = $1,603 / $798 CR 5 = 2.01x CR 1.86 2.13 2.01 3.10 Current Ratio
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Yr. 3 Yr. 4 Yr. 5 Ind. QR 5 = (CA - Inv.) / CL QR 5 = ($1,603 - $873) / $798 QR 5 = 0.91x QR 0.88 0.99 0.91 1.70 Quick or Acid Test Ratio
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Asset Management Ratios Inventory turnover Account receivables turnover Days sales outstanding (DSO) or average collection period (ACP) Fixed assets turnover Total assets turnover
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Yr. 3 Yr. 4 Yr. 5 Ind.
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